The Ethical
and the Economical
The Capitalist-Nation-State and Associational Companies : Introduction

Preface

The ethical and the economical
- these are the two issues I want to raise here. The pursuit of ethical
values and the pursuit of efficiency seem to oppose each other and impossible
to reconcile. Modern society has become too economical without paying much
respect to ethics - this is a common cry of today. Major sociologists, therefore,
find their missions in finding out how to be ethical or to sustain morality
in the "economical" modern society. Auguste Comte's emphasis on
morality is a good example. Organic solidarity - or moral education - is
the famous theme of Emile Durkheim. They are mainly concerned with the question
how to use a certain modernized version of ethics to limit the "too
economical" modernization - to use one pole (ethical) to slow down
the other (economical). A risk of reactionary - the return to a moral yet
restrictive community - is, however, inherent in such questioning.

In
fact, the economical - the pursuit of efficiency - itself is not entirely
an immoral thing that has to be limited. Without pursuing efficiency,
ethical activities cannot often continue. The economical is essentially
to do away with social wastes, i.e., hazards for flexible exchanges -
which can be ultimately an ethical thing. The two opposing poles - the
ethical and the economical - can actually point to the same goal. Without
attempting to accomplish the two seemingly antagonistic attitudes at the
same time, neither the ethical nor the economical is achieved in the long
run. Rather, we have to switch constantly between the two attitudes. This
is our condition. For example, if someone started an ethical movement,
but failed to organize it efficiently, participants would get frustrated,
end up in accusing each other for failures and thus act "unethically."
Without being "economical", it is difficult to remain ethical.

On the other hand, when I observe
capitalism producing huge amounts of waste and causing economic disturbance
constantly, another question comes to my mind: without being ethical, can
we sustain the economical? Capitalism is not ethical, sure, but is it even
economical?
Without the private ownership, there is little motive for the efficiency.
Nevertheless, the adherence to it can undermine the social efficiency. Its
renouncement - especially technological information - is "economical"
from a global viewpoint and the humanity's well-beings. The recent hustle
over the use of anti-AIDS drugs in Africa without legal patent fee is a
good example. In science, people almost freely interchange their ideas and
discoveries. In spite of obvious social benefits, such a custom cannot be
generalized in wider society, because there exist conditions inherent in
human exchanges: we do not want to give up our products without receiving
equivalent in value. We have to abolish the private ownership, but we cannot
do away with it, either. The ethical accusations against capitalism will
cloud our eyes - we have to closely and objectively examine how these conditions
emerge. We have to clarify the social conditions that are making the collaboration
of the ethical and the economical difficult.
Today, economical transactions mean exchanges using money. We express our
judgments of value through money. It plays a pivotal role in human relations
and connections. And this reliance on money necessitates the emergence of
capitalism. In order to examine such structures, we still owe hugely to
the later works of Karl Marx. For the theoretical analysis of capitalism
and the nation-state, I will draw upon his works, along with several other
works of sociology and political economy.
Merely clarifying social conditions, however, could lead to determinism.
Such theoretical labors can indicate what kind of movements are not the
alternatives to capitalism, but are hard to propose a potential alternative.
For such a purpose, it is my firm belief that we have to explore, not only
the theory, but the real movements existing now. Fortunately, I have encountered
one suitable company, Two-One in Japan, that is managing to be both ethical
and economical by employing numerous original methods. Because this company
has an internal structure that can be called an association of workers,
I will term such a company an associational company.

Theoretical
Discourses

There are numerous amounts
of works about Marx. Because Marxism has always been political, however,
the interpretations of his works are often ideologically biased. More
or less simplified explanations, rather than rigorous scientific examinations,
have generally promulgated, such as describing him as the inventor of
the class theory. The question why this simplification happened itself
could be the subject of a sociological research. But Marx wrote complex
analyses of capitalism. For example, he started his Capital with the analysis
of the form of value - money. Rather than the traditional Marxian emphasis
on the production relationship, he himself has focused on money and credit
- because essentially the latter formulates and models the relationship
of the people. Money, like language, determines how people communicate
with each other.

Several attempts to establish
an economy alternative to capitalism have failed and remained feeble -
or they have turned into "another capitalism." The problem of
these movements was the misunderstanding of how capitalism works. Marx
criticized classical political economy; but as is clear from his descriptions,
he was also criticizing the past socialist movements from Left Ricardians
(the Chartist movement) and Owenian corporatism, to the French socialists
and anarchists (Proudhon, collectivism of Louis Blanc etc.). German social
democrats, such as F. Lassalle, were not exempted from his critiques.
Marx himself, however, left only a few sketches of the possible alternative
society. In German Ideology, he has even stated that communism should
not aim at a certain ideal:

Communism is for
us not a state of affairs which is to be established, an ideal to which
reality [will] have to adjust itself. We call communism the real movement
which abolishes the present state of things. The conditions of this movement
result from the premises now in existence.

(Marx,
Karl, The German Ideology)

There is no question that Marx's
followers had trouble imagining the socialist society. Marxism was, therefore,
basically formulated in the line of Engels - the former Chartist. The
central theses of Marxism became the base-superstructure theory, historical
materialism and the claim that the source of surplus value is only the
exploitation of labor - none of them original to Marx and emphasized by
him. It was Engels who included these ideas, borrowed from Left Riccardians
or the German historical economists, such as Wilhelm Friedrich Schulz.
Following Marx's remark quoted above (this part was written by Marx),
Engels found his "premises now in existence" - on-going monopolization
and the state capitalism. Engels' final hope was that, by simply switching
the head of this structure, he would get a state socialism - the planned
economy and the mutual ownership of the means of production. Of course,
Marx also states such a program several times, especially before he studied
Political Economy seriously. Lenin's Soviet socialism basically followed
this route. In fact, in his later years, Marx was envisioning the possible
communism as the association of cooperatives formed by free individuals
(e.g., Civil War in France). In this sense, his idea was not entirely
different from early Soviets or Rate - or even from one of his biggest
antagonists, P.J. Proudhon.
At any rate, his later critiques of political economy - Grundrisse, Contribution
to the Critique of Political Economy and Das Kapital - attest his complex,
still uncontested understanding of capitalism. Not only the two classes
- capitalists and workers - but numerous kinds of economic players appear
in his works. For instance, he repeatedly states the difference between
money-dealing capital and moneylenders. Such analysis in detail is not
too trifle. The former economizes the use of money, while the latter provides
money. This distinction is important to discuss the question where interest
emerges. I will present a theoretical discourse that is concise yet very
attentive to these and other important details.

It is not only the classical
works of Marx that form the backbones of my theoretical argument here.
In fact, it was rather some of recent studies that inspired me to reread
Marx from a different perspective.
The renowned Japanese intellectual Kojin Karatani has learned a lot from
other Japanese students of Marx, such as Kozo Uno or Hiroshi Iwata. But
his recent work from the 1990s, Trans-Critique (recently published in
English by MIT) has in many ways superseded previous works. For instance,
his continuous focus on merchant capital or the circulation process (commodity
markets) is important, especially since it goes against the traditional
Marxists' emphasis on the production industry. Without focusing on them,
it is entirely impossible to grasp how capitalism realize surplus value
- there is no surplus value if commodities are not sold well in markets.
If the theory that surplus emerges in the production is true, whether
they are sold is no longer a question.

Also Karatani's concept of
the capitalist-nation-state as the modern developed structure of the essential
three forms of exchange - market exchange, reciprocity and appropriation-redistribution
- is original, although he has just sketched this theory briefly in his
book. In this concept, works of Georg Simmel, Benedict Anderson and Theda
Skocpol, for instance, beautifully fit in. Skocpol claims that the state
has its own mission - appropriation - and is not a mere tool of capitalist
classes. I will substantiate this capitalist-nation-state theory by drawing
on these and other numerous sociological works.
Karatani's other essential theme has been money. The use of money in market
exchanges will lead to the positional differences of sale and purchase.
Surplus value will emerge in the transfer of goods from a cheap price
system to the higher. The exploitation of workers is simply about the
distribution of the surplus value thus emerged. The point is that without
money such surplus will not emerge; but once using money, the society
inevitably becomes capitalistic. We can expect only gradual changes in
various micro segments.
Also to understand the capitalistic process and structure rigorously,
the works of Shigeru Iida - who had specialized in the finance or credit
theory of Marxian political economy - are indispensable. He emphasizes
the functional difference between commercial and bank credit. Such difference
seems too trifle, but misunderstanding in detail can be fatal. For example,
Proudhon's alternative movement, the Bank of People, recommended the general
use of commercial credits, which replace the money issued by the Bank
of France. He failed to recognize that interest essentially emerges in
bank credit, not in commercial credit. When used in simple exchanges or
payments, money does not bear interest. It is in the custom of loaning,
where interest becomes a crucial issue. But Proudhon believed that the
general use of commercial credits will stop the interest-bearing. He was
missing the point. The inevitability of bank loans soon brought back interests.
In fact, when Karatani proposed the use of alternative money, he was also
unclear about this distinction. Not the alternative money, but the alternative
credit is the question we have to explore. I will review several past
movements or systems accordingly to find out what could be a "possible"
alternative instead.

The
Case of Two-One

A typical example for the reconciliation
of the ethical and the economical have been cooperatives. They are, however,
usually not entirely "economical," serving as the escape grounds
for industries that can no longer expect sufficient rates of profit in
capitalism. Classical forms of a cooperative were modeled by Robert Owen
or the Rochdale group and legalized by congresses of various countries.
We do not necessarily have to follow these legal forms. We can choose
a structure of a company and its associations more freely - probably legally
a joint-stock company with a cooperatives-like structure - to stay economical
and realistic enough, but also to remain ethical.
For such a purpose, I will present a case-study of one attractive example.
It is an eyeglasses retail-chain in Japan called Two-One. This company
is legally a joint-stock company, but it has numerous features the usual
type of profit-seeking corporations does not have - what becomes clear
from the five mottoes of the company:

All the profits gained
from a business year will be shared by workers, and also used as a reserve
to discount merchandise, thus contributing to customers.

Only workers own stocks and they all participate in management.

We will allow no unnecessary intermediate sections, most importantly
human resources.

We will disclose the company's business achievements, financial affairs
or salaries.

We do not set any norms or goals for employees.

As I researched the company,
I encountered numerous techniques and methods - not at all limited to
these five - to achieve a both ethical and economical way of business
management. What I was mostly impressed by was that these methods have
solved several issues I found crucial and hard to solve from the theoretical
analyses mentioned above. Moreover, Two-One has been "economical,"
growing steadily by average 10-20% a year. I will term such a company
as an "associational company."

In my research, I have tried
to illuminate the following points:
First: the inner-structure of the company. It resembles cooperatives.
Especially, the method they use to decide bonuses for workers is unique.
As I have explained, only workers share the stocks - the bonus, therefore,
means two things: dividends and the evaluations of jobs. The unique part
is that they evaluate each other in the intranet, instead of bosses or
human resources sections doing the evaluation. They claim that it is actually
impossible to judge "accurately" the quantity of each employee's
contributions. Rather than spending too much time on evaluation, therefore,
a representative hands in a rough evaluation sheet of all the workers
to the intranet. Then, everybody sees it, suggests minor adjustments,
and they stop at where everybody feels treated "fair enough."
By decreasing the cost for human resources in this way, each worker rather
receives a higher income. This results in a cut-down of costs and satisfies
workers. I have questioned how these systems work concretely, along with
the dividend system and other financial methods.
The second point I have focused on was the franchise-chain system. In
Japan, the term refers to the "independently-owned" shops that
have alliances - rather than chain shops which are owned by the main headquarter.
In this regard, the relationship between each shop and the entire alliance
is similar to the cooperative association of free individuals. Two-One
has even devised this system and made it more associational.
The third point of the research is the relationship with other companies,
especially with producers. Though sounding strange, they claim to have
attempted to "buy higher and sell cheaper" - what seems to be
the opposite of the capitalist goal. I wanted to know how exactly such
a thing could be possible.
These are the essential points I have clarified in the interviews. Conclusions
thus achieved will be valuable for anybody who aspires to start an ethical
and economical company.
Of course, we still have enormous questions to be answered. For example,
Two-One is merely a single company; it will be more difficult to form
larger associations of such companies. Two-One is merely a peculiar case;
it may be impossible for other companies to imitate. How about a different
industry where great amounts of investment are necessary? The relation
with the state system is also an important question. I have to confess
that I do not have concrete answers to these questions. But as of now,
I am satisfied with presenting only one example - at least, this will
be the hope for the people who are suffering in today's capitalist-nation-state
structure. The development of associational companies and their alliances
will be one of the crucial issues of the twenty-first century - to be
both ethical and economical.